Two notes on BuzzFeed’s new cash

BuzzFeed last night announced a $50 million round of funding from Andreessen Horowitz, at a reported valuation of $850 million. A couple of things to note:

1. This deal follows an acquisition offer earlier this year from Disney DIS, as first reported by Fortune. We initially reported that talks broke down, in part, over price, and that that the offer may have been as high as $1 billion. But we (and others) later reported that the actual bid was closer to the $800 million range. That puts BuzzFeed’s latest $850 million valuation into better perspective.

Moreover: Three years ago, when Huffington Post sold to AOL for $315 million, it was profitable with $30 million in revenue, 25 million monthly unique visitors and 200 employees. BuzzFeed is expected to top $100 million in revenue this year at a profit, with 150 million monthly unique visitors and 550 employees.

2. None of BuzzFeed’s prior investors participated in this round and there were no secondary sales. That’s surprising, because many late-stage deals include one or the other (this round, a Series E funding, brings the seven-year-old company’s total investment to $96.3 million). Typically at this point, investors either re-up with pro-rata shares, or they cash out. But early investors and employees were not given the opportunity to cash out, Fortune has learned. “Everyone is all in,” one early investor said.

Given that BuzzFeed just turned down a lucrative offer in favor of going it alone, some early employees might be itching to sell some of their stock. Indeed, turning down Disney is a reason why Jon Steinberg, BuzzFeed’s COO, left the company in May. BuzzFeed Chairman Ken Lerer told Fortune at the time, “When [CEO] Jonah [Peretti] decided he didn’t want to sell to anybody, obviously that started conversations about different opportunities and Jon wasn’t willing to say, ‘Okay guys, I’m in this for another four, or six, or ten years.” Steinberg quickly resurfaced as CEO of Mail Online, the digital business of the British newspaper, The Daily Mail.

BuzzFeed’s funding comes as the company reorganizes itself, splitting off its video operations into a group called BuzzFeed Motion pictures. Later today, Fortune.com will publish interviews with Ze Frank, BuzzFeed’s head of video, Jonathan Perelman, general manager of video and CEO Jonah Peretti.

In a related video, BuzzFeed CEO Jonah Peretti tells Fortune managing editor Andy Serwer about how he’s thinking about the future of his publication. You can watch it here.

Buzzfeed’s CEO has advice for The New York Times

With its engaged audience of 150 million young readers, BuzzFeed has been the envy of many traditional media companies. Earlier this year, the company has even attracted an acquisition bid from DisneyDIS.

At the Fortune Brainstorm Tech conference in Aspen, Colo. today, BuzzFeed’s founder and chief executive Jonah Peretti said Disney was worth entertaining, even if BuzzFeed plans to stay private. “[Disney CEO] Bob Iger is a very impressive guy, and I enjoy talking to him,” he said. “And if someone can convince George Lucas to sell Lucasfilm and Steve Jobs to sell Pixar, they’re worth having dinner with.”

Earlier this year, BuzzFeed made waves in the media industry by publishing the New York Times Innovation Report, an internal document that outlines the paper’s challenges in transforming The Gray Lady into a digital media company. BuzzFeed itself was referred to several times in the report, along with digital media startups such as Vox Media and Upworthy.

Peretti said he believes the Times was actually too hard on itself. If he were writing the report, it wouldn’t be focused on the various tech products that the Times lacks. ”The challenge is not that they need some feature some competitor has. It would be about the shift to digital,” he said.

“One big mistake people make across all of business is to want to become what you’re not. People get obsessed with [their competitors]. If you’re in TV, you want to be online and be cool and webby,” he said. “If you’re cool and webby, you want to buy and produce original shows,” he said.

“Copying BuzzFeed in general is not a good strategy,” Peretti added. “The best way to success is to think of what you’re really good at and extend yourself in those areas.”

One thing BuzzFeed did recently, which the New York Times would not likely copy, is delete some old articles. Earlier this week Gawker reported that several BuzzFeed posts from 2010 and 2011 had disappeared from the site because they did not meet the site’s current “editorial standards.” On stage at Brainstorm Tech today, Peretti said those posts were from an earlier version of BuzzFeed, before the company hired editor-in-chief Ben Smith to turn BuzzFeed into a professional news organization.

Those posts were done before BuzzFeed had a copy desk, a style manual, and a team of reporters. “It was almost the product of a different company, like before our pivot,” he said. “[It was] before we pivoted to being a journalistic organization—from a lab to being a place that creates professional content.”

After turning down Disney, what’s next for BuzzFeed?

When Jonah Peretti walked away from a lucrative acquisition offer from Disney DIS, it put the wheels in motion for BuzzFeed. This was not a young company turning down a paltry offer to cash out early. BuzzFeed is seven years old, with investors ($46.3 million worth) and employees (more than 500), all eager for a solid exit.

It was a bold move that has implications. For one, last week BuzzFeed’s COO, Jon Steinberg, left the company with no successor in place. After working at BuzzFeed for four years, Steinberg exited his highly visible role, which included running the company’s profitable native advertising business and speaking frequently on CNBC.

The timing of Steinberg’s exit – just after he met his four-year vesting period, and just after BuzzFeed turned down the Disney offer – was no coincidence. Steinberg had been in favor of the Disney deal, according to a person familiar with the situation. Unlike Peretti, who had made millions in the sale of Huffington Post to AOL in 2010, Steinberg did not have a big win under his belt.

Put another way: Steinberg did not want to sign on for another four years of working at BuzzFeed. When Peretti turned down the sale to Disney, Steinberg was ready to leave. An exit memo simply said that Steinberg “has decided it’s time to move on.” BuzzFeed Chairman Ken Lerer said there was not a “straight line” between any potential Disney transaction and Steinberg’s exit. “A squiggly line, maybe,” he said. “When Jonah decided he didn’t want to sell to anybody, obviously that started conversations about different opportunities and Jon wasn’t willing to say, ‘Okay guys, I’m in this for another four, or six, or ten years.”

As a result of turning down the Disney offer, BuzzFeed has been working behind the scenes on plans to go public, according to a person familiar with the situation. The company will not officially rule other options, such as taking on secondary equity to buy out early investors, potentially from the private equity firms and hedge funds that have been increasingly investing in tech startups. Lerer told Fortune that BuzzFeed has talked about going public at the board level, but has not made any decision yet. One thing the company has ruled out is selling to another company.

That last part should be self-evident: The landscape of potential media buyers which could afford to acquire BuzzFeed at a valuation of $800 million to $1 billion is small. Traditional media players are cash-strapped themselves, and a $1 billion deal would value BuzzFeed at 6.25 times its expected revenue of $120 million for 2014. (For context, AOL paid 5 times the expected revenue for The Huffington Post.) Likewise, Peretti is steadfast in his desire to keep BuzzFeed independent.

An IPO would likely not happen until 2015, as most companies that want to go public this year have already hired bankers. Even those who have reportedly filed a “secret filing,” like Box, have delayed the listing due to recent public market volatility.